Major European aerospace companies announced a preliminary agreement to merge their unprofitable satellite production operations, joining together following extensive discussions to compete against the rapid expansion of competitors spearheaded by Elon Musk's Starlink.

The highly anticipated agreement involving Airbus, Thales and Leonardo seeks to establish a new enterprise beginning in 2027, pending authorization from European regulatory authorities who have previously opposed similar consolidations.

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The yet-to-be-named organization will have 25,000 employees throughout Europe and generate annual revenue of 6.5 billion euros ($7.58 billion), according to 2024 data, the firms announced.

According to reports, Airbus will own 35 percent of the venture, with Thales and Leonardo each maintaining 32.5 percent stakes, and it will function under shared management "with an equitable governance framework."

The companies stated that the space merger is projected to produce synergies worth hundreds of millions of euros in the mid-triple digits annually for operating income, beginning five years after implementation.

Referred to internally as "Project Bromo," discussions among the three aerospace corporations began the previous year in an effort to replicate the collaborative framework of European missile manufacturer MBDA, which belongs to Airbus, Leonardo and BAE Systems.

 

Europe's leading satellite manufacturers have historically competed in building sophisticated spacecraft for geostationary orbit but have faced challenges from the emergence of inexpensive miniature satellites operating in low Earth orbit.

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The chief executives of the three corporations announced in a collective statement that the consolidation would assist governments in securing "Europe's independence in the crucial space sector".

The agreement will merge the production and service operations of Thales Alenia Space and Telespazio - two partnerships between Leonardo and Thales - along with multiple Airbus space and digital operations, Leonardo's remaining space ventures, and Thales SESO.

The corporations, which have previously eliminated approximately 3,000 positions combined in the space sector, did not reference additional workforce reductions but indicated that labor representatives would be involved in discussions about the initiative.

Earlier reports this week suggested that the three aerospace corporations had established a preliminary agreement regarding a potential combination of their satellite operations.

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The accord among the three firms - each having experienced tense relationships previously - was rescued after individuals knowledgeable about the situation reported that negotiations had encountered challenges concerning management structure and company worth during the summer months.